Home loan for young couple.?

Question

My fiance and I are wanting to get a home loan and here's our scenario. She's making about $300 every two weeks, which translates roughly into 600 a month. I was just recently unjustly discharged from my job and I'm currently getting unemployment and I'm getting about 580 a month and I'm looking for a job. We're currently renting a townhouse for $530 a month, so we can easily afford a home loan with a monthly payment under 600 dollars a month. But I doubt the banks really look at that, they usually just look at debt ratio and credit score. But my question is, Are we going to be able to get a home loan? We're going to the bank on Friday to see how much we can get pre-approved for, but before going I just want to see if that will be a waste of time, how much do the people in the Yahoo! Answers community think we'll be able to get approved for.
I should also mention that we both have fairly decent credit, we don't really have anything bad on our reports.

Answer 1

I know that loan underwriting varies from market to market...here is how your situation would go in my area:
A lending institution will only count earned income. So, your unemployment compensation would not count and they could only count your wife's income. If you want to be on the loan with her, you will have to have employment for at least one uninterrupted year.
The banks would consider the fact that you have been paying $530/mo. for your rent...they don't strictly look at debt ratios and credit. Underwriting is a more user-friendly process these days and not everything is so black and white.
A general rule of homebuying thumb is that a person (or a couple) can afford a home that's anywhere from 2.5 to 3 times the amount of their gross annual income. (which doesn't make much sense, they really should deal with net....but the rule makers didn't ask me).
So having said that, as it stands now, 2.5 to 3 times her income would afford you a home from $18,000-$21,600.
Let's just say that you find a job and make the same amount as her. The combined affordability would allow you to purchase $36,000-$43,200. Mind you, this is just counting your income and not your debts. The lenders do have to account for any open debts that you will pay on for 10 months or more. (so the affordability numbers could be a bit lower).
Keep your eyes open for predatory lenders! If anyone tried to convince you that you'd be able to afford a home for upwards of $100,000, it sounds like they're trying to set you up to fail.
I hope that helps! Good luck!

Answer 2

Normally your debt to credit ratio is a big factor, but you are unemployed. You will not qualify at all. Your loan will be based on $600/month or $7200 annually. I doubt that you will be able to purchase a home where your payment is less than $300/month. Normal credit/debt ratio is no more than 1/3 of your salary, though some mortgage brokers will finance up to 50%, which is $300.

I honestly wouldn't waste my time at this point. Until you are working again, and have been working steadily for a while, I'd wait and remain where you are.

Answer 3

Another option is to get a "Stated Income" loan, where you simply state your income instead of providing W-2's and tax forms to verify income. Many people overstate their income on these "liar loans" to qualify and get rates that are comparable to a fully documented loan.

They *will* do a Verbal Verification of Employment, i.e. call your work to make sure you have a job, which in your case is bad, but in your wife's case is good. Also, the income you tell them must be reasonable and you will need 2 years of work history.

Be careful not to jump into this without all the relevant information. $600/month is really not much for a housing payment once taxes + insurance is included. You may be looking at buying a very cheap Townhouse, or a mortgage lender may steer you to a bad product that just happens to have low initial payments.

If I were you, I would worry about getting back on my feet with regards to employment before making this significant move. After all, you need to make the payments each month, right?

Answer 4

The problem is that you are not currently working. If you go to the bank, they will only see her income, which is roughly $600 a month, which means you will not qualify for a loan where the payment is $600 a month. You may have perfect credit scores, but without the income, you won't qualify. You'll have to wait until you are able to start working again.

Answer 5

Without being employed, you're only option will most likely be a "Stated Income" loan. These are at a higher interest rate and usually for individual in higher income brackets that are self employed. Why the hurry to buy? The most dangerous thing about being a homeowner are the unexpected expenses. Lets say you're sqeeking by making your mortgage and the water heater goes out, the roof begins to leak, a tree limb falls through the roof and you have to come up with the $500 deductable for your homeowners insurance. Keep in mind that above and beyond you monthly mortgage you'll have homeowners insurance, property taxes, gas, water, electric, phone, cable and maintenence. Just some things to think about.

Answer 6

Most generally banks will look at your income. Your total house payment must not exceed 30 - 35% of your total income. Your fico score is used to come up with a loan percentage rate. If you have enough income to purchase the home, you'll also need a 10 - 20% down payment. Although some banks will loan 100% of the value of the home, I would not recommend doing that.

I hope it all works out for you and you can get what you want.

Answer 7

I would have to say that YES you probably CAN get a loan..They will probably only look at her income..So you will not qualify for as much as you would like to ...I would wait until you get a job first...Unemployment checks are not pay checks!..They don't count and they do not show your stability...A lot of lenders like you to have had your job for at least a year...So to help you out you might try to get a "similar" job.....

So I am saying if you both have great credit and very little to no debt you will probably be able to get a VERY, VERY tiny loan..ss

My best guess is you might qualify for 25,000 on her credit alone and that is if she had great credit and NO debt..

Answer 8

can no longer take position. in case your fiance has low credit and also you somewhat any, you may want to spend the subsequent 2 to three years rebuilding/construction your credit. There are not any more effective subprime loans - lenders are in uncomplicated words giving mortgages to those those with a modern-day (previous 2 years) historic previous of sturdy to staggering credit.